Causes of the 2007-08 subprime crisis

Describe what happened in the subprime mortgage crisis.

A US housing bust that turned into a global banking crisis through securitisation and leverage. Lax lending to weak borrowers fed a housing bubble; the loans were pooled into MBS and CDOs that received high ratings and were held with heavy leverage, often off balance sheet. When house prices fell and defaults rose in 2007, these securities lost value and became impossible to price, funding markets froze, and failures such as Bear Stearns and Lehman Brothers in 2008 forced large government rescues.